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Impact of PV Panel Penalties Pondered

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Melinda A. Rose, [email protected]

WASHINGTON, March 21, 2012 — Smaller-than-expected duties on imports of crystalline silicon photovoltaic cells from China, announced by the US Department of Commerce on Tuesday, had proponents on both sides of the issue putting a positive spin on the action.

The tariffs range from 2.9 to 4.73 percent and were imposed after the Commerce Department found that producers and exporters in China received illegal government subsidies. The finding is a preliminary determination; a final ruling is expected to be announced in June.

Gordon Brinser, US president of SolarWorld, speaks at the solar trade action press conference in October 2011 about the case against China as US Senator Jeff Merkley looks on. (Photo: SolarWorld USA)

The size of the tariffs is widely seen as a blow to US solar manufacturers. Industry executives and analysts reportedly expected them to be larger, and as news of the size of the tariffs hit the financial market, shares of some China solar companies rose as much as 14 percent before giving up most of those gains today.

The “surprisingly low” numbers would likely mean that the major Chinese companies would need to pay between about $5 million and $10 million to cover products shipped, a relatively minimal impact, Citigroup analyst Timothy Arcuri told Reuters.

“Today’s announcement affirms what US manufacturers have long known: Chinese manufacturers have received unfair and WTO-illegal subsidies,” said Steve Ostrenga, CEO of Milwaukee-based Helios Solar Works, in a statement on the website of CASM, the seven-manufacturer Coalition for American Solar Manufacturing, which represents about 15,000 workers at more than 150 US companies.

“As we stated in our testimony to the [US] International Trade Commission (ITC), we are not dumping, nor do we believe that we are unfairly subsidized,” said Robert Petrina, managing director of Yingli Green Energy Americas Inc., the US subsidiary of the China-based Yingli Green Energy Holding Co. Ltd. “We will continue to fight for affordable solar energy and further growth of the tens of thousands of US solar jobs that we help to create. Regardless of the outcome of this proceeding, we remain dedicated to the US solar market.”

In 2010, the US Department of Energy estimated that the Chinese government provided its manufacturers with more than $30 billion in subsidies. CASM contends that China’s subsidies spurred its producers to build huge excesses of manufacturing capacity, to export more than 95 percent of production and to sell product at artificially low prices to unfairly seize US market share at the expense of domestic producers. At least 12 US manufacturers of crystalline silicon solar cells and panels have closed plants, gone bankrupt or staged significant layoffs since 2010, the coalition says.

One such manufacturer is Solyndra, a manufacturer of rooftop solar panels that filed for bankruptcy in September after receiving more than $500 million in government loans (See: Solyndra Files for Chapter 11).

Earlier this month, CASM released a report that found the US swung from a small surplus in solar product trade with China in 2010 to a $1.6 billion trade deficit in 2011. This swing unfolded, the coalition said, despite the fact that a National Renewable Energy Laboratory presentation concluded that Chinese manufacturers actually face a 5 percent cost disadvantage in producing and delivering solar into the American market, compared with US manufacturers. The Chinese producers built some 16 times more manufacturing capacity than it needed to satisfy domestic demand, then exported more than 95 percent of production, CASM said.

In 2011, China exported 93.2 million products to the US, with a combined value of $3.1 billion, the Commerce Department said, while in 2009 it exported 26.8 million products valued at $639.5 million.

SolarWorld solar cells manufactured at the U.S. headquarters in Hillsboro, Oregon. (Photo: SolarWorld USA)

In a related action, the Commerce Department and the ITC are conducting an anti-dumping investigation on solar cells from China, with the Commerce Department scheduled to announce its preliminary determination on May 17, at which time additional tariffs could be imposed. In June, if it finds that China is “dumping” solar panels in the US for less than their actual cost, the ITC will make its injury determination in July. No final tariff decisions will be made until the ITC investigation is completed.

In announcing the tariffs, the Commerce Department also clarified the scope of the ongoing investigations, saying that it covers not only imports of solar cells, modules and panels produced in China from China-made solar cells, but also imports of modules or panels produced outside that country from solar cells made in China. Modules, laminates and panels produced in China from cells made in another country are not covered.

The investigation covers crystalline silicon photovoltaic cells, modules, laminates and panels that are 20-µm thick or greater. It doesn't include thin-film photovoltaic products made from amorphous silicon (a-Si), cadmium telluride (CdTe) or copper indium gallium selenide (CIGS).

“We commend the Department of Commerce for its preliminary decision today, which is the first step in a process that will roll out over the next several months,” said Gordon Brinser, president of SolarWorld Industries America Inc., a member of CASM and petitioner in the anti-subsidy and anti-dumping cases. Based in Germany, SolarWorld also has production facilities in Hillsboro, Ore.

The Commerce Department’s decision “is a relatively positive outcome for the US solar industry and its 100,000 employees,” said Jigar Shah, president of the Coalition for Affordable Solar Energy (CASE), in an official statement. “This decision clearly demonstrates that the Commerce Department did not find the Chinese government engaged in massive subsidization, as SolarWorld and CASM claim.”

CASE objects to any solar tariffs, Shah said, because they will hurt American jobs and prolong dependence on fossil fuels. He cited a recent study by the Brattle Group that determined that placing “artificially high” tariffs on solar panels will result in the loss of up to 60,000 US jobs by 2014. “Fortunately, this decision will not significantly raise solar prices in the United States,” he added.

“The major trade issues between China and the US affect every export-oriented industry, not just solar panels,” wrote industry production equipment provider GT Advanced Technologies CEO Tom Gutierrez in an editorial on the CASE website. “This issue should be addressed by bilateral negotiations between the two countries. The answer is not imposing a special tariff – really a tax – on solar panels. That 'tax’ would be built into the costs of solar energy systems, making solar power much more expensive for electric utilities and commercial and residential consumers.”

On 140 acres of unused land on Nellis Air Force Base, Nev., 70,000 solar panels are part of a solar photovoltaic array that will generate 15 megawatts of solar power for the base. (U.S. Air Force photo/Airman 1st Class Nadine Y. Barclay)

“If fair international trade can be re-established, the solar-pioneering US industry will once again compete on legitimate market factors such as product performance, production efficiency and unsubsidized pricing,” Brinser said. “We need both the domestic manufacturing and installation businesses to participate in fair competition to advance our solar industry’s reach for greater national energy, economic and environmental security.”

“If we address unfair trade practices in the US solar market, we can get back to our business of expanding American manufacturing and jobs in the renewable energy sector,” said Carlo Santoro, director of business development at MX Solar USA in Somerset, N.J., a manufacturing member of CASM. “We look forward to getting back to the fair and legal competition that serves everyone best.”

“The important thing to remember is that tariffs are bad for the entire solar industry,” said Liansheng Miao, Yingli Green Energy Holding chairman and CEO. “We will continue to support the US as an important solar market, and believe that global trade and fair competition will persevere. Today’s decision validates that.”

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Mar 2012
a-SiAmericasAsia-PacificBusinessCarlo SantoroCASECASMCdTeChinaCIGSCoalition for Affordable Solar EnergyCommerce Departmentcrystalline silicon solar cellsdefenseenergygreen photonicsindustrialinternational tradeITCJigar Shahlight speedMaterials & ChemicalsMelinda RoseMX SolarphotovoltaicsPVPV modulePV panelRobert Petrinasilicon solar panelssolarsolar cellssolar panel dumpingsolar panelssolar tariffSolarWorldSolyndratariffUS Department of EnergyUS International Trade CommissionYingli Green Energy AmericasYingli Green Energy Holding

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